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Royal Bank of Scotland jumps the gun on overdraft charges

Royal Bank of Scotland, which is majority owned by the UK government on behalf of UK taxpayers, has today jumped the gun ahead of a House of Lords ruling on overdraft charges and announced significant reductions to come in from 1 October. The cost of a bounced cheque or unpaid direct debit, due to a lack of funds, will fall from £38 to just £5 and the charge for acquiring an item using unauthorised overdraft funds will fall from £30 to just £15. So why has the Royal Bank of Scotland taken this step?

The case against the UK banking sector has taken many years to get to court and even now we could still be some way off a final settlement. While forecasts for potential payouts if the banks lose the case range from anything up to £1 billion it seems as though the UK banking industry is at the very least willing to drag this out as far as possible. The test case being brought by the OFT (Office of Fair Trading) could actually cost UK banks over £2 billion a year in lost income, which is one more reason why the high street banks are so keen to contest the case. Does Royal Bank of Scotland know something which nobody else is aware of?

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